MONEY The Economy

Hurricane Arthur’s Threat to the July 4 Economy

A major storm is threatening the East Coast on the biggest holiday weekend of the summer, and evacuations have already sent hundreds of thousands of people scurrying away from the coast.

Hurricane Arthur’s timing couldn’t be worse. While hurricane season technically starts in June, few expect big storms to arrive before late July. Tourists tend to think of the Fourth of July weekend as a pretty safe bet.

“You expect it to be hot, maybe a little muggy,” says Douglas Woodward, a University of South Carolina business professor who has studied the economic impact of hurricanes. What you don’t anticipate is a storm strong enough to force 250,000 people to evacuate (which is what happened in North Carolina’s Outer Banks), or that caused one major city (Boston) to move its Fourth of July fireworks show up a day to avoid Arthur at its peak.

“I’ve been here 28 years, and I don’t recall a significant storm hitting this early in the season,” said Woodward. “You think maybe over Labor Day there could be one, but not July Fourth.”

It’d be reasonable to assume that the economic impact of such a storm, which has caught many tourists off guard, is likely to be devastating. Surprisingly, experts and even local business owners don’t think this will be the case.

(MORE: It’s Hurricane Season: 5 Ways to Disaster-Proof Your Finances)

“The timing’s bad, that’s undeniable,” said William Hall, an economics professor at the University of North Carolina-Wilmington. “But all signs indicate this will be a mild storm. It’ll be a short-lived event.” Hall predicated that power outages will be “minimal,” and estimated that coastal retail businesses might see revenues fall one percentage point or two because of Arthur. “There will be a lot of people who cancel today or tomorrow at hotels, but most of them will be replaced by walk-in traffic, so those rooms will be rented,” he said. The storm “will have an impact, but won’t be anywhere near a 100-year impact.”

Even in Boston, where Fourth of July festivities were hurriedly moved a day earlier to avoid the incoming storm, Arthur isn’t supposed to put much of a hurting on the economy. Boston 4 Productions, the group responsible for Independence Day fireworks and an evening Boston Pops concert, is merely turning their previously scheduled dress rehearsal—which traditionally draws 75,000 people—into the main event. So the costs incurred by switching the date are mostly a wash.

Steve MacDonald, the company’s spokesman, says that workers had successfully finished loading pyrotechnics on Wednesday night, so the fireworks show would be ready for Thursday (rather than Friday) evening. Ultimately, the show looks to remain on budget. “The biggest cost is to the public having to adjust their schedules,” said MacDonald.

Arthur also seems unlikely to seriously impact local Boston businesses. Randy Clutter, general manager of Bistro Du Midi, a French eatery just a few blocks away from the city’s Independence Day events, explained that the Fourth of July isn’t a particularly essential weekend for the restaurant business.

“If this would happen on New Year’s Eve, that would be a disaster,” said Clutter. “Valentines Day, that would be a disaster.” On the other hand, the Fourth of July “is not a make-or-break day for us.” Clutter expects traffic to be down about 30% on Friday, but doesn’t foresee the storm having a major impact on his bottom line.

In fact, many businesses stand to benefit from the fact that Arthur has thrown a huge number of tourists’ plans up in the air. Most obviously, the 250,000 Outer Banks evacuees have to go somewhere. While many will simply go home—if they live in Raleigh, for instance—others will wait out the storm in motels and spend money in inland-town businesses and restaurants along I-95, where traffic is sure to be horrendous. “It’ll help Cracker Barrel, that’s for sure,” said USC’s Woodward.

In the popular South Carolina beach destination of Myrtle Beach, chamber of commerce president Brad Dean told the Sun News that he expected spending to be strong. “We anticipate a wet, windy start to the holiday weekend, which may actually drive some business to the indoor amusements in our area, but overall it will be a fun time for visitors and residents,” Dean said on Wednesday. “Visitors are still planning to come, and the weekend should be packed with vacationers.”

Yet while Arthur’s economic impact appears that it won’t be catastrophic, the arrival of a major storm so early in the season is worrisome for a different reason. “This was supposed to be a mild season,” said UNCW’s Hall. “But it sure is starting off with a bang, isn’t it?”

Longer term, the economic impact of Arthur and similar storms on the Outer Banks depends largely on how Highway 12, the lone road to Hatteras Island, holds up. “It’s the most vulnerable stretch of highway in America,” said Robert Young, director of Western Carolina University’s Program for the Study of Developed Shorelines.

Hundreds of millions of dollars have been spent on the road’s upkeep, which is damaged and even washed away in parts on a fairly regular basis. When that happens, the road can be closed for days, sometimes weeks, and beyond the millions spent on repairs, there’s obviously a sizeable impact on local businesses, beach rental properties, and the vacation plans of thousands of tourists. “It’s such a vulnerable road that it doesn’t have to be a big storm to cause major problems,” said Young.

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